"Under bond" is one of those phrases every distiller hears but few have explained clearly. Here it is.
What it means
Spirit held "under bond" is spirit on which excise duty has not yet been paid. It sits in your licensed premises (your bonded area) until something happens to it.
When excise is triggered
Duty becomes payable when spirit is entered for home consumption — broadly, when it leaves the bonded setting to be sold domestically. Until then, it's under bond and no duty is due.
Movements that stay duty-free
- Exported spirit (leaves the country)
- Spirit transferred under bond to another licensed party
- Spirit destroyed under approved conditions
Why records matter
You need to show what's under bond, what's been entered for home consumption, and what's moved or been lost. This is core to the records the ATO requires.
Software that tracks bonded vs tax-paid finished goods makes this automatic — see managing finished goods and the excise compliance guide.
This article is general information, not tax or legal advice. Confirm your obligations with the ATO or a qualified adviser.
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